The perversion of ‘full employment’

In advocating the pursuit of ‘full employment’ last month, George Osborne sardonically offered a deliberate echo of the UK’s Keynesian past. Yet there is more substance to this knowingly provocative claim than it might appear at first.

It would be implausible to suggest that Osborne’s agenda represents a genuine departure from a neoliberal policy framework, the ascendance of which led to the marginalisation of the pursuit of full employment as a central aspect of economic statecraft. However, it is precisely the success of neoliberalism in its remaking of the UK economy that lends credibility to the resurfacing of this objective.

As such, full employment – generally understood not as universal employment, but rather a situation in which 80 per cent of the working-age population is in work – is rendered an expectation of what the labour market is capable of delivering, rather than something that the government will directly seek to bring about through demand management.

We can see this orientation most clearly in the coalition government’s approach to ‘active labour market policy’ (ALMP). Some of the policy instruments now associated with ALMP have been around for decades, but it was not until the 1990s, as part of the turn to ‘supply-side economics’, that the notion of ALMP as a distinct form of policy intervention emerged. As such, ALMP encapsulates policy interventions designed to improve the employability of individuals, most specifically those seeking work.

ALMP therefore typifies a neoliberal understanding of unemployment as an individual rather than collective problem. A progressive slant on ALMP reimagines the state as ‘enabling’ citizens to fulfil their duty to work, as responsibility for preventing hardship is thoroughly individualised. This was the rationale that propelled New Labour’s flagship contribution to ALMP, the New Deal.

The Work Programme is the coalition government’s attempt to depart from previous practice, yet the scheme merely intensifies, rather than transforms, existing provision. The Work Programme is a mandatory, two-year ‘back to work’ scheme for people that have been in receipt of Jobseekers’ Allowance for more than a year (nine months for young people). Through the scheme, participants are offered intense support in searching for work, and basic training in job-acquisition skills.

The Work Programme therefore encompasses no meaningful attempt to improve the ‘human capital’ of participants – an objective that is often assumed, wrongly, to be at the heart of ALMP. Labour had already shorn the New Deal of this objective when it followed advice from David Freud (now a Conservative minister) to introduce the Flexible New Deal (FND). Ironically, however, by the time FND was implemented in 2009, Labour had already reintroduced the (limited) training and job-subsidy elements of the original New Deal, in different guises, in response to the recession.

The Work Programme essentially replicates the FND, including the wholesale privatisation of employment support services for the long-term unemployed. Measured by conventional means, the scheme is failing. It is not succeeding in placing the long-term unemployed into sustainable employment. Only 3 per cent of cases have led to providers (who are largely paid by results) being paid in full, as a result of delivering a sustainable employment outcome.

From a wider and more critical perspective, however, the Work Programme is performing perfectly adequately. ALMP in the UK serves to facilitate, and even legitimate, a particular type of labour market, upon which a wider model for economic growth rests. The Work Programme is designed to ensure people are immediately available to work, whether they end up in a job or not, in order to maintain downward pressure on pay and conditions, and labour market ‘flexibility’, in the volatile services sector which now utterly dominates the UK economy.

Similarly, the Work Programme’s failure does not detract from its role in inculcating the desirability and necessity of certain behaviours at the individual level. Participants must be ready for any job.

It is in this context that the rediscovery of ‘full employment’ becomes explicable. The context in which this ideal is now espoused by Osborne is radically different to that in which it was denounced by his predecessors. The labour market has been thoroughly ‘liberalised’, and the growth model demands not the control of inflation to manage wage demands, but rather the (nearly) full mobilisation of the potential workforce to maintain the profit margins of labour-intense services sector industries. This is explored further in my forthcoming SPERI paper, ‘The hyper-Anglicisation of active labour market policy: facilitating and exemplifying a flawed growth model’ (which will be available here at the beginning of June).

ALMP typifies the dual impact of neoliberalism on economic statecraft in the UK, in that it facilitates both ‘roll out’ and ‘roll back’ of the frontiers of the state. ALMP clearly designates the responsibility of individuals themselves in terms of securing employment. ALMP interventions, especially the Work Programme, are designed to facilitate more effective engagement with the labour market – not to shape the market itself.

At the same time, however, ALMP increases the reach of the state into the realm of determining individual behaviour and choices. ‘Full employment’ is no longer a progressive ideal – it’s a lecture in neoliberal morality.